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Ganesh Chaturthi 2018: Will it bring about a revival in Mumbai’s property market?

Amidst rising prices of essential commodities, increasing home loan rates and a falling rupee, we look at whether the festive season starting with Ganesh Chaturthi, holds any positives for the real estate market in Mumbai

Ganesh Chaturthi marks the start of the festive period. It is a time, when developers strive to clear their old stock, increase sales and capitalise on the positive sentiment. For home buyers, the festive season translates into good deals and offers on property transactions. Hence, this period brings a win-win situation for all stakeholders in the real estate sector. However, this year, Ganesh Chaturthi will be celebrated in a scenario, where the Indian rupee is depreciating against the US dollar and home loan interest rates are inching upward.

Anuj Puri, chairman of ANAROCK Property Consultants, says that “As per ANAROCK data, out of the total new supply (of approximately 1,14,400 units) from January to August 2018 across the top seven cities, the Mumbai Metropolitan Region (MMR) saw the maximum new launches, with nearly 35,800 new units. On the sales front too, the region clocked maximum housing sales with approximately 15,200 units being sold in Q2 2018, an increase of 26 per cent against the previous quarter.” Despite the gloom over rising prices, experts, hence, expect to see an uptick of 10-15 per cent in residential sales velocity during the festive season, due to various promotional schemes offering direct/indirect reductions in the prices of apartments.Ravi Ahuja, senior executive director, Mumbai and developer services, at Colliers International India, points out that developers are rolling out discount schemes and freebies, to lure home buyers, to address the issue of inventory build-up. “Developers usually launch discount schemes, in the form of various interest subvention schemes, offering flexible payment plans to buyers with 10 per cent or 20 per cent down payment and the rest on possession. Developers also offer freebies, especially in the case of ready-to-move-in apartments, in an attempt to lure buyers to reduce their inventory overhang,” he explains.

Despite the positive environment, the proposal by the state government to levy a surcharge of one per cent on stamp duty (resulting in an increase to six per cent from the existing five per cent), could prove to be a dampener in the short-term, as property prices will rise further. A major impact of this increase, is likely to be felt in the affordable housing segment.

Other challenges for Mumbai’s real estate market:

Inventory build-up and high cost of borrowing.

Meeting regulatory requirements, with respect to RERA.

Procuring multiple approvals from government authorities.

High GST rate and rising input costs.

Increase in home loan interest rates

Although interest rates have increased in the recent past, they remain low, compared to 2011-2012. Additionally, tax exemptions available on home loans, under sections 24B and 80C, help reduce the effective home loan interest rate for borrowers. The government’s decision, to relax the eligibility criteria by increasing the carpet area to 160 sq metres for MIG-I and 200 sq metres for MIG-II houses, will also encourage home buyers, especially in smaller towns.

Home buyers looking at the affordable and mid-segment housing, should focus on Thane, Navi Mumbai, as these locations, with their excellent infrastructure and cosmopolitan nature, have emerged as sought-after peripheral destinations. “Premium locations like Bandra west to Andheri west, will remain in-demand and given the 10-12 per cent price correction in older buildings, one can use this as an advantage, to buy for current or future end-use,” suggests Ahuja.

Niranjan Hiranandani, CMD of Hiranandani Communities and national president of NAREDCO, maintains that property prices have remained static in most micro-markets across the MMR. “Moreover, there is a possibility of further sweetening of the deal from the developers’ side, at the purchase stage. Given these two factors, I would say that in most micro-markets, property prices across Mumbai are attractive for home buyers,” he concludes.-by Amit SethiSource : Housing.Com

The construction of the Bandra-Versova Sea Link will begin within a month as Maharashtra Chief Minister Devendra Fadnavis has approved the project. The sea link will be thrice the length of the Bandra-Worli Sea Link.
Previously, in a bid to fast track the long-awaited infrastructure project, the state government had provided viability gap funding of Rs 2,500 crore, that is collected as a premium for extra floor space index, sold to real estate developers.
Being built at an expense of Rs 9,500 crore, the link would be a toll-route. The Maharashtra State Road Development Corporation (MSRDC) will appoint two separate contractors for toll collection and repairs and maintenance.
The sea link would be 9.2-km long and would serve as an extension to the existing Bandra-Worli Sea Link. Once operational, the commuters travelling to south Mumbai from Western Suburbs can skip the Western Express Highway and can use sea links for the commute which would have connectors at Bandra, Otters Club, the Juhu Link Road and the Versova Link Road.
Route to reduce congestionCurrently, one has to take the Western Express Highway to reach south Mumbai from the western suburbs and have to pass through congested areas such as Borivali, Andheri, Juhu, Mahim, etc. The journey usually takes 60-90 minutes during peak office hours. With the new road, the travel time would be reduced to 12 minutes. The connectivity is expected to improve further by a series of roads and tunnels.
Also, to ensure fewer jams at the points where vehicles enter and exit this new sea link, the MSRDC has proposed three connectors. The first such connector will run between Bandstand road in Bandra and VBSL, the other two connectors will link the Western Express Highway (WEH). One would take off from Juhu-Koliwada area and connect the WEH via the Milan flyover. The other would connect Nana Nani Park in Versova with WEH, near the Bisleri factory in Andheri (East) via CD Barfiwala Road.
TimelineThe sea link was approved by the Cabinet Committee on Infrastructure (CCI) in 2009. The original cost of the project was Rs 5,975 crore which has now been escalated to Rs 9,500 crore. The state government took four years to get the clearance from the Coastal Regulation Zone (CRZ) and Environment Ministry, which was finally spelled out in January 2013. CM Fadnavis in April 2016 directed the MSRDC to construct it on an engineering, procurement and construction basis.
The new corridor could be a game changer for the Mumbai real estate market as it would improve connectivity between the suburbs and the main commercial business district. With travelling time coming down to 12 minutes from 60 minutes with a projected toll tax of Rs 60, mid-segment buyers would make way to housing hubs near Versova such as Kandivali, Borivali and Mira Road. Though the property prices here have crossed Rs 9,000 per square foot (sqft), the growing connectivity would further push the property prices upwards.
With enhanced connectivity from the farther suburb, the crowded areas of Andheri, Chembur, Ville Parle are expected to be decongested and the excessive pressure on the express highways would be relieved. - by Surbhi Gupta
Source : PropTiger